Gold & Silver Daily

Ed's Critical Reads

Aug 21, 2014

Mob boss calls a stock bubble

Former mob boss Michael Franzese thinks investors should avoid the U.S. stock market, but should you take his investment advice?

"There's a bubble there that's going to burst at some point and when it does it's not going to be good," Franzese, a former mob boss for the Colombo crime family in New York who has become an author and motivational speaker, told CNBC.

It's not just the valuations. He's got another reason for advising investors to keep their money off Wall Street.

"I did a lot of things at times with people on Wall Street," said Franzese, who believes there is still a contract out on his life. "A lot of guys are shady and they did shady things with me and I don't trust them. And I don't like other people that I don't know really well taking care of my money. I think that I can do it better."

What's the difference between Wall Street and this guy?  At least he's a reformed crook, something that won't happen to Wall Street.  I'll take his word on things any day compared to the usual shills that they have on that network.  This very interesting 7:15 minute video clip [plus transcript] appeared on the CNBC website just after midnight on Wednesday morning---and I thank West Virginia reader Elliot Simon for today's first 'story'.

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Jim Rickards: "I'm expecting the next crisis sooner rather than later"

Listening to James Rickards ain’t healthy for your stomach.

The American lawyer, economist, and investment banker predicts that the global economy is heading for a disaster which will be even worse than the financial crisis of 2008. At the center of this horrifying scenario is the end of the Dollar as the leading world reserve currency, says the author of "The Death of Money".

He’s putting the blame on the massive money printing of the Federal Reserve and on over-reliance on flawed models to manage risk. Rickards is no stranger to financial crises himself: In the fall of 1998, he was the principal negotiator of the rescue of the hedge fund Long-Term Capital Management (LTCM).

An interview is only as good as the questions asked---and the person asking them.  This is a great one, as are Jim's answers.  It was posted on the Swiss website fuw.ch on Tuesday afternoon---and I thank reader Harold Jacobsen for digging it up for us.

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BofA reaches $17 billion settlement with U.S.

Bank of America has reached a record settlement of nearly $17 billion to resolve an investigation into its role in the sale of mortgage-backed securities before the 2008 financial crisis, officials directly familiar with the matter said Wednesday.

One of the officials, who spoke with The Associated Press on condition of anonymity because the announcement isn't scheduled until Thursday at the earliest, said the bank will pay $9.65 billion in cash and provide consumer relief valued at $7 billion.

The deal is the largest settlement arising from the economic meltdown in which millions of Americans lost their homes to foreclosure. It follows agreements in the last year with Citigroup for $7 billion and with JPMorgan Chase & Co. for $13 billion.

This AP story was picked up by the finance.yahoo.com Internet site early Wednesday evening EDT---and it's another contribution from Elliot Simon.  There's another AP story on this subject.  It's headlined "Why Bank of America deal might not cost it $17B"---and it's courtesy of Elliot Simon as well.

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Financial Times: Wall Street Plays Dangerous Derivatives Games — Again

The same kinds of complex, confusing derivatives that almost brought down the global financial system in 2008 are back in spades, according to the Financial Times. As one trader put it: "We've reformed nothing."

The U.K. newspaper suggested investors may be fooled by a false sense of security, and are therefore “chasing levered returns via certain types of US credit derivatives that Wall Street is willingly providing in the current climate of low interest rates and moribund volatility.”

The developments suggest that the financial industry learned little from the 2008 meltdown and that reforms put in place since then are ineffective.

“While standardized derivatives such as interest rate swaps are now transacted in exchange-type venues and centrally cleared, the flourishing area of opaque products are not, and moreover there are few records of activity that regulators can monitor,” the Times said.

This Financial Times article appeared on the moneynews.com Internet site at 7:51 p.m. EDT on Tuesday evening---and it's worth reading.  I thank Brad Robertson for sharing it with us.  There was also a very interesting 6:29 minute video about this derivatives story [featuring Janet Tavakoli] posted on the cbc.ca Internet site on Tuesday as well---and if you read the above story, this video is worth watching as well.  I thank Vancouver, B.C. reader 'Ashley D' for bringing it to our attention.  The link is here.

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Credit Swaps Polished in $19 Trillion Derivative Overhaul

The biggest overhaul to the $19 trillion credit derivatives market in more than a decade will seek to solve flaws that have stopped some contracts paying out as buyers anticipated.

The changes come too late for investors in the junior debt of Banco Espirito Santo SA, whose credit-default swaps were devalued this month when the Portuguese lender was rescued and restructured by the government. Since the contracts are tied to the majority of a company’s debt, if the borrower is reorganized the swaps don’t necessarily stay tied to the securities they’re meant to protect.

Investors will start signing up to convert outstanding trades into new contracts as early as this week after the International Swaps & Derivatives Association rewrote the documentation to address the weaknesses. The biggest impact of the shakeup may be in the cost of swaps tied to subordinated bank bonds like those of Banco Espirito Santo, which will be about 50 percent more than existing contracts, according to Citigroup Inc.

This article, filed from London, showed up on the businessweek.com Internet site on Tuesday sometime---and it's another offering from Elliot Simon.

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Fed debates merits of earlier rate hike given U.S. jobs gains

The U.S. Federal Reserve hinted on Wednesday that a surprisingly strong jobs market recovery could lead it to raise interest rates earlier than it had been anticipating.

At the same time, most Fed officials wanted further evidence before changing their view on when rates should rise, according to the minutes from the central bank's July 29-30 meeting.

"Labor market conditions had moved noticeably closer to those viewed as normal in the longer run," the minutes said, adding that policymakers "generally agreed" the job market was healing faster than they had expected.

Since there's nothing the Fed can do, as its hands are tied, it has resorted to talking the markets into doing what it wants.  We'll see how well that works out going forward, as a rate increase at this point would devastate the bond market.  This Reuters article, filed from Washington, appeared on their website at 4:26 p.m. EDT on Wednesday---and I thank Orlando, Florida reader Dennis Mong for sending it our way.

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Argentina bonds, peso reel on country's debt swap plan

Argentina's new plan to skirt U.S. courts and resume payment on defaulted bonds aims to protect creditors who participated in two debt restructurings, the economy minister said on Wednesday as the local peso currency weakened to a new historic low.

Defying a U.S. federal court order, Axel Kicillof also said it would be "madness" to pay holdout creditors the 100 cents on the dollar that they were awarded in 2012.

The government has sent a bill to Congress that would replace its New York intermediary bank with state-run Banco Nacion, the latest move in a years-old legal chess game between Argentina and its "holdout" creditors who refused to participate in the restructuring.

Argentina's black market peso reeled on the news, falling 2.0 percent to an all-time low 13.5 to the U.S. dollar. The country's benchmark dollar-denominated bonds due in 2033 slumped more than 2.0 percent in price.

This Reuters story, filed from Buenos Aires, appeared on their website at 2:56 p.m. EDT yesterday---and I thank Dennis Mong for his second contribution in a row.  I had several other readers send me stories about this yesterday, but this is the first one where the deal was explained in such a way that I could grasp it.  Helping things out is this 3:22 minute CNBC video clip from Tuesday.  Jim Rickards explains it all---and the link to that is here.  This CNBC video is also courtesy of reader Harold Jacobsen.

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World Business Leaders Call for Speedy Ukrainian Crisis Resolution

The conflict in Ukraine should come to an end, and 16 Russian, Ukrainian and international business leaders are willing to help, said a statement published Wednesday on Virgin Group founder Richard Branson’s website.

“As concerned business leaders from Russia, Ukraine and the West we encourage our governments to compromise and find a peaceful solution to the current conflict. If we can help in the process we’re happy to do so,” the statement said.

“As the world has become more and more interconnected, we have an opportunity to advance peaceful solutions that will bring about a better future for all. As responsible leaders, we must ensure that differences are resolved peacefully, through dialogue and diplomacy, and with respect for both national sovereignty and the right of all human beings to live in peace,” the statement read.

The businessmen urged the governments to cooperate to avoid slipping back into the Cold War era past. The statement also appealed to other business leaders around the world to help create ways to resolve the issues peacefully.

Voices of reason at last.  This RIA Novosti article appeared on their Internet site at 7 p.m. Moscow time on their Wednesday evening, which was 11 a.m. EDT yesterday morning---and it's the first offering of the day from Roy Stephens.

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Ukraine Crisis Continues: Paul Craig Roberts

Having served Washington's propaganda purposes, the downed Malaysian airliner and the alleged Russian armored column that entered Ukraine and was allegedly destroyed have dropped out of the news even though both stories remain completely and totally unresolved.

Washington's stooge government in Ukraine has not released the communications records between Ukrainian air traffic control and Malaysian flight 17, and Washington has not released the photos it claims were taken by one of its satellites, which was directly overhead at the time of the airliner's demise.

We can safely and conclusively infer from this purposeful withholding of evidence that the evidence does not support the story Washington and Kiev want us to believe.

We can also safely and conclusively infer that the Western media's sudden disinterest in the unresolved story and failure to demand the evidence kept secret by Washington and Kiev is in keeping with the Western media's role as a Ministry of Propaganda.

This absolute must read commentary from Paul was picked up by the RIA Novosti website late Wednesday morning Moscow time---and it's courtesy of reader M.A.

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Slovakia plants seed in Ukrainian gas sector

Slovakia and Ukraine have laid the preliminary groundwork for a long future in the natural gas sector, the Slovakian minister of economy said from Kiev.

The Ukrainian government this week said testing began to send 70 million cubic feet per day from Slovakia to Ukraine through the joint work of transit companies Uktransgaz and Eustream.

Ukrainian Energy Minister Yuri Prodan hosted Slovakian Minister of Economy Pavol Pavlis in Kiev to discuss the prospects of a new relationship in the natural gas sector.

"Small reverse flow will become a basis for further collaboration between Slovakia and Ukraine," Pavlis said in a statement.

The question that begs to be asked is "Where is the Ukraine going to get the money to pay for this gas when it does finally arrive?"  This UPI story, filed from Kiev, was posted on their website at 8:49 a.m. EDT yesterday morning---and it's the second offering in a row from Roy Stephens.

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First 16 Russian Aid Trucks Move to Ukrainian Border Crossing for Customs Clearance

The first 16 trucks with Russian humanitarian aid to the population of violence-torn eastern Ukraine have started movement toward customs office at the Donetsk border crossing point, a RIA Novosti correspondent reported Wednesday.

"The trucks will pass through a special customs scanner at the crossing, which is 100 meters away from their current location," the correspondent reported from the site.

The rest of the 280-truck convoy remains near the Russian town of Kamensk-Shakhtinsky some 20 miles away.

This RIA Novosti article, filed from Donetsk, showed up on their website at at 8:48 p.m. Moscow time on their Wednesday evening---and it's another contribution to today's column from Roy Stephens.

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Russia Adds Live Fish to List of Embargoed Goods

The Russian government published an amended list of embargoed goods Wednesday, which now includes live fish.

The decree also removes lactose-free dairy products from the list of goods banned for import from countries that sanctioned Russia.

Norway is Russia's largest provider of fish, according to the Federal Customs Service. Russia imports up to 60 percent of the fish consumed in the country, especially in large cities.

This is another story from the RIA Novosti website.  It was posted there at 5:14 p.m. Moscow time on their Wednesday---and I thank Roy Stephens for sending it our way.

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China, India to Replace Canada, Australia, U.S. as Meat Suppliers to Russia

Chinese and Indian meat is to replace banned pork and beef exports from the West, which will not succeed in reclaiming its position on the Russian market if the embargo is lifted, Russia’s relevant authority said Wednesday.

“For example, Russia’s Far East used to be heavily reliant on meat supplies from the United States and Canada. Now that [we are] actively cooperating with China’s veterinary authorities on … pork supplies from certain highly-integrated Chinese enterprises, the U.S. and Canadian suppliers will not be able to come back,” Sergei Dankvert, the head of Russia’s Federal Service for Veterinary and Phytosanitary Surveillance, said in a statement released on the agency’s website.

According to data from Russia’s Federal Customs Service, Moscow imported 619,200 tons of pork for $2.13 billion in 2013. Brazil, Denmark, Germany and Canada were the principal suppliers of the meat. Canada exported 79,300 tons of pork to Russia in 2013 for $246.3 million, while U.S. pork exports had reached $19 million per year.

This is another article from the RIA Novosti website.  It appeared at 7:43 p.m. Moscow time on Wednesday---and my thanks go out to Roy Stephens once again.

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Poland demands WTO challenge over Russia food ban

Poland has made a formal request that the EU take Russia before the World Trade Organisation (WTO) to overturn its ban on EU food and vegetables.

Reuters reported on Tuesday (19 August) that Poland’s economy ministry had sent a written request for a legal challenge to EU trade commissioner Karel De Gucht.

The move is expected to be confirmed by agriculture minister Marek Sawicki and economy minister Janusz Piechociński at a press conference on Wednesday (20 August).

This article appeared on the euobserver.com Internet site at 7:45 a.m. Europe time on Wednesday morning---and it's courtesy of Roy Stephens as well.

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Four Moscow McDonalds shut by Russian consumer watchdog

Russia’s consumer watchdog has shut down four McDonald's restaurants in central Moscow – including the first-ever outlet in the country – over “administrative violations.” More of the company 430 Russian franchises are under investigation.

“Multiple violations of sanitary norms were detected in the sourcing of food and waste disposal in McDonald’s restaurants during inspections carried out between the 18th and 20th of August,” said an official statement from the watchdog, Rospotrebnadzor.

The company has said that it will study the allegations against its franchises, and “will do everything to ensure that the restaurants open as soon as possible.”

“McDonald’s main priority is offering its customers quality and safe produce,” said a statement on the McDonald’s website.

One wouldn't think that there's much wrong with these restaurants, but like everything in Russia involving the West these days, they're caught in the crossfire.  This Russia Today story was posted on their Internet site at 3:26 p.m. Moscow time yesterday afternoon---and it's the second-last offering of the day from Roy Stephens.

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Construction on Russian gas line to China slated for September

Construction on a natural gas pipeline meant to feed the Chinese market is set for the beginning of September, a Russia official said Tuesday.

A pipeline contract between Gazprom and China National Petroleum Corp. is for 30 years and calls for 1.3 trillion cubic feet of natural gas per year. Russian energy company Gazprom said it started working on the infrastructure necessary for the pipeline almost immediately after signing a contract for gas to China in May.

A Russian source told state news agency RIA Novosti construction on the pipeline should begin next month.

"Sept. 1 is a tentative date, and it will all depend on the schedules of the country's leaders," the source said Tuesday.

This UPI story, filed from Moscow was posted on their Internet site at 9:31 a.m. EDT on Tuesday---and it's the final offering of the day from Roy Stephens.

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Iraqi army clashes with militants in Tikrit after retaking key dam

Skirmishes broke out Tuesday between Iraqi security forces and militants on the outskirts of Tikrit a day after the Iraqi and Kurdish troops - backed by U.S. airstrikes - dislodged Islamic militants from a strategic dam in the country’s north.

The United Nations refugee agency, meanwhile, said it is launching one of its largest aid pushes aimed at helping close to a half million people who have been forced to flee their homes by the violence in Iraq.

The clashes in Tikrit, some 130 kilometers (80 miles) north of Baghdad, began on the militant-held city’s southwestern outskirts when a military convoy was travelling along the main highway that links Baghdad with the northern provinces, they said. The Iraqi military shelled militant positions inside and outside the city.

There were no immediate reports of casualties. The local official and resident both spoke on condition of anonymity, fearing for their safety.

This news item was posted on the france24.com Internet site yesterday sometime---and I found it all by myself.

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China troops enter disputed India territory: sources

Chinese troops have advanced in recent days into disputed territory claimed by India, echoing a similar incursion last year that raised tensions between the two rival giants, official sources said on Tuesday (Aug 19).

Chinese troops twice crossed over the border into a remote area of the western Himalayas, with some unfurling a banner that read "this is Chinese territory, go back", an official said on condition of anonymity.

Indian border police noticed the troops on Sunday in an unpopulated area of Ladakh during a patrol of the informal border that separates India and China. "It was a temporary peaceful face-off with PLA well inside Indian territory," the official told AFP referring to China's People's Liberation Army.

This news item showed up on the channelnewsasia.com Internet site at 5:37 p.m. local time in Singapore---and I thank Brad Robertson for his second contribution of the day.

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China Levies Record Antitrust Fine on Japanese Firms

China found a dozen Japanese auto-parts makers guilty of price fixing and doled out the biggest antitrust fines in the country since relevant rules came into effect six years ago.

Total fines amounted to 1.24 billion yuan ($200 million), the National Development and Reform Commission, China’s main economic planner, said on its website. Sumitomo Electric Industries Ltd. drew the heaviest fine at 290.4 million yuan -- the biggest-ever antitrust penalty for a single company -- followed by Yazaki Corp.

While China follows the U.S., Europe and Japan in punishing parts makers, the fines come as foreign businesses increasingly voice concerns that an era of heightened regulatory scrutiny is dawning on the world’s second-largest economy. Global Car manufacturers, technology companies and food companies have faced antitrust probes in the country since last year.

“This sends a warning to companies engaging in global price-fixing that they should beware of China,” said Chen Danzhou, a lecturer specializing in anti-monopoly law at the University of International Business and Economics in Beijing. “The government is getting more aggressive as it tries to make a structural adjustment to the market.”

This Bloomberg story, co-filed from Shanghai, Tokyo---and Osaka, was posted on their Internet site at 10:39 p.m. Denver time on Tuesday evening---and it's the final offering of the day from Elliot Simon.

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Three King World Blogs

1. John Embry: "Coming Crash to Create a Human Tragedy of Epic Proportions"  2. Grant Williams: "Why the Next Mania in Gold Will Be Parabolic"  3. Doug Kass: "The Final Page in an Age of Innocence"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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China paper denounces 'rampant rascality' of Australia tycoon

A Chinese state-run newspaper on Wednesday called on Beijing to "teach Canberra a lesson" after Australian tycoon and politician Clive Palmer labelled the Communist government "mongrels" who "shoot their own people" in a televised tirade.

The flamboyant mining baron, who is locked in a long-running dispute over royalties and port operations with a state-controlled Chinese company, also called the Chinese "bastards" who "want to take over this country".

In an editorial, the Global Times, a newspaper owned by the Communist Party's mouthpiece the People's Daily, urged Beijing to take "solid actions to punish him".

It labelled the billionaire's comments as "rampant rascality" showing "Australian society has an unfriendly attitude toward China".

Open mouth---insert foot.  Lots of bucks doesn't necessarily translate into lots of brains, regardless of the nationality.

This AFP article appeared on the france24.com Internet site at 9:05 a.m. Europe time on Wednesday morning---and I thank South African reader B.V. for bringing it to our attention.

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Gold and silver prices may not really shine until 2015-6 warns Ross Norman

Arguably London’s most accurate gold forecaster for the past 15 years, Sharps Pixley CEO Ross Norman is warning of single digit gains only for the yellow metal this year, though he has not lost his sights on ‘very much higher prices’ in 2015-16.

His gold forecast last year suggested that 2014 would be a ‘Goldilocks’ year – not too hot and not too cold – with rally fade to both the upside and downside as the market reverted to the mean – so far that view appears to have held true.

Speaking from his office in Berkeley Street he told ArabianMoney that gold and silver prices will only really shine again when there is again a perceived serious inflation threat and he just can’t see one on the immediate horizon.

It's hard to know if he's being serious or not---as there's not a word about the fact that a small group of Commercial traders have captured the price-setting mechanism for all four precious metals, plus copper, on the Comex.  It's also hard to know which of John Embry's three categories Mr. Norman falls.  Is he ignorant, naïve---or complicit?  Considering his background---and current occupation, I would have to cast my vote in favour of 'complicit'.  And if that's the case, he's not exactly telling us the truth in this opinion piece---which I found on the Sharps Pixley website yesterday.

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Tentative signs of stronger Indian gold demand in 2nd half of 2014

Gokulasthami, one of the major festivals celebrated across Maharashtra and some parts of South India, has now got a touch of gold, underscoring what some expect will be stronger second half for gold demand in India as the festival season ramps up.

If anything attracts Indians, it is gold, and gift prizes of gold pots, and gold coins, and even gold plated decorations rouse the masses.

The tradition of Dahi Handi festival on Gokulashtami, celebrated across India on August 18 and 19 this year, relates to a human pyramid breaking an earthen pot filled with buttermilk suspended high above the ground, sometimes well over 50 feet above the ground.

This very interesting gold-related story, filed from Mumbai, was posted on the mineweb.com Internet site yesterday sometime---and the real 'juice' is in the last half-dozen paragraphs.

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Aug 20, 2014

Study Finds 25% of U.S. Troops Use Food Banks

A new study suggests that 25 percent of troops in active duty, Guard and the Reserve use food banks to provide groceries and meals for themselves or their families.

The study sponsored by Feeding America, the nation's largest food bank network, is conducted once every four years and was based on data collected in 2012. It found that four percent of surveyed households who used a food bank contained a currently serving military member.

Based on those results, Feeding America officials estimated that 620,000 of their 46.5 million customers, or about 25 percent of the military population in 2012, used food banks.

This article appeared on the military.com Internet site on Monday---and today's first story is courtesy of West Virginia reader Elliot Simon.

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Average Price of Ground Beef Hits All-Time High

The average price for all types of ground beef per pound hit its all-time high -- $3.884 per pound -- in the United States in July, according to data released today by the Bureau of Labor Statistics (BLS).

That was up from $3.880 per pound in June. A year ago, in July 2013, the average price for a pound of ground beef was $3.459 per pound. Since then, the average price for a pound of ground beef has gone up 42.1 cents--or about 12 percent.

Five years ago, in July 2009, the average price for a pound of ground beef was $2.147, according to the BLS. In those five years, the average price has climbed by $1.737 per pound--or almost 81 percent.

This article appeared on the cnsnews.com Internet site at 11:10 a.m. EDT yesterday---and I thank reader M.A. for sharing it with us.

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Map: How much $100 is really worth in every state

Not all Benjamins are created equal.

For the first time ever, the federal government this year introduced a data series that compares price differences among states and metropolitan areas. Those estimates — regional price parities and real personal income — offer something simple and immensely useful for anyone considering making a move: They allow you to compare how far your money goes in each state.

You’d squeeze the most out of $100 in Mississippi, where you could use it to buy $115.74 worth of goods and services, relative to the national average. Arkansas comes next, followed by Missouri, Alabama and South Dakota. The state where $100 falls flattest is Hawaii, where that same $100 gets you only $85.32. (D.C., though not a state, is even worse: It would buy you just $84.60 in goods.)

This short, but excellent story, contains a not-to-be-missed chart.  It appeared on the washingtonpost.com Internet site on Monday sometime.  Reader Harry Grant sent it to me in time to make yesterday's column, but I was already 'full up'---so it had to wait until today.

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36% Of Americans Haven’t Saved Anything For Retirement

Over a third of all Americans (36%) have not saved any money for retirement, according to a new Bankrate.com report. Sixty-nine percent of 18-29 year-olds haven’t saved anything, along with 33% of 30-49 year-olds, 26% of 50-64 year-olds and 14% of people 65 and older.

I would like to take this opportunity to thank my dear mother for insisting that I start putting away money as soon as I got my first job out of college. It certainly has added up over 25+ years and indeed mother knows best.

The good news is that Americans who are saving are starting earlier. Twice as many 30-49 year-olds started saving in their 20s as opposed to their 30s. But 50-64 year-olds were only slightly more likely to have started saving in their 20s than their 30s, and Americans 65 and older were almost evenly split between starting in their 20s, 30s and 40s.

This commentary appeared on the philadelphia.cbslocal.com Internet site at 10:03 a.m. EDT on Monday---and is another story that didn't make the cut for my Tuesday column, so here it is now---and I thank Howard Wiener for sharing it with us.

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Dr. Dave Janda interviews your humble scribe

The good doctor and I spent 25 minutes together on all-talk radio WAAM1600 out of Ann Arbor Michigan on Sunday---and if you have the time and think you might learn something, have at it.

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Citibank could lose Argentina banking license

If the banking giant obeys a U.S. judge’s order, it risks losing its banking license in Argentina — and the $2 billion it has in local deposits.

But if it follows Argentine law, it risks violating a U.S. federal court order.

Citi finds itself in this precarious position after Manhattan federal court judge Thomas Griesa — who is overseeing the bitter battle between hedge-fund mogul Paul Singer and Argentina over an estimated $3 billion due on bonds defaulted upon in 2001 — ordered the bank not to pay out on some of the country’s locally issued bonds.

Griesa initially exempted Citi’s Argentine law bonds from his sweeping order — stopping payouts to exchange bondholders unless Argentina also paid Singer and other holdout bondholders who demanded full payment.  But Griesa changed his mind last month after learning that some of the bonds for which Citi is custodian were also exchange bonds.

This very interesting "Catch-22" situation appeared on The New York Post website at 10:50 a.m. EDT on Monday morning---and it's courtesy of South African reader B.V.

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Another Eyjafjallajokull? Airlines on alert as Iceland's largest volcano threatens to erupt and create chaos for air travellers

Airlines are on high alert after geologists warned that an Icelandic volcano may be close to erupting.

Officials issued a ‘code orange’ to travel firms after intense seismic activity at the Bardarbunga volcano in the island’s centre.

It is the second highest level of risk, signalling ‘heightened or escalating unrest with increased potential of eruption’, according to the International Civil Aviation Organisation.

The alert will raise fears of a repeat of the chaos seen when Iceland’s Eyjafjallajokull volcano erupted in 2010.

A dust cloud shut down much of Europe’s airspace for six days, affecting more than ten million people and costing £1.1billion. Passengers were stranded as 100,000 flights were cancelled during the Easter holidays.

This article appeared on the dailymail.co.uk Internet site at 11:26 a.m. BST yesterday---and was updated twice since midnight BST on their Wednesday morning.  It's definitely worth reading---and although you may be shocked by this, I found this story all by myself!

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U.K. ambassador ‘lobbied’ U.S. senators to obscure Britain’s complicity in CIA rendition program

Records published under Britain’s Freedom of Information (FOI) Act have compounded concerns that the U.K. government lobbied U.S. officials to keep Britain’s role in CIA torture and rendition out of a soon-to-be published Senate report.

Newly-released data reveals Britain’s ambassador to the U.S., Peter Westmacott, engaged in at least 21 separate meetings with members of the US Senate’s Select Committee on Intelligence (SSCI) prior to its publication of this report, heightening existing allegations that the British government may be seeking to sanitize the document.

Westmacott met with key Democrats and Republicans on the SSCI throughout the body’s investigation of the CIA program, records obtained by the UK legal charity Reprieve reveal.

Of particular note are two separate meetings with Senator Feinstein in the immediate aftermath of the U.S. government’s decision to publish what is expected to be a damning report on CIA torture, interrogation and rendition.

This very interesting, but not surprising story appeared on the Russia Today Internet site at 12:55 p.m. Moscow time on their Tuesday afternoon, which was 4:55 a.m. EDT---and it's the first offering of the day from Roy Stephens.  It's worth reading if you have the time.

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First Briton pleads guilty to Libor rigging

Paul Robson, a former trader at Rabobank, has become the first Briton to plead guilty to being part of the worldwide conspiracy to rig the Libor interest benchmark.

The executive, who worked at the Dutch bank’s London office, admitted before a New York court to one count of bank fraud and wire fraud, as part of a conspiracy that also involved the taxpayer-backed Lloyds Banking Group.

The scheme, which was designed to boost profits at the companies involved, which affected mortgage rates and pension payments around the world, estimated to have cost the public trillions of pounds.

According to the Department of Justice, Mr Robson worked with two other named Rabobank traders, as well as unnamed traders at other organisations including Lloyds, to manipulate Yen Libor between 2006 and 2011.

This news item showed up on the telegraph.co.uk Internet site at 11:49 p.m. BST on Monday evening---and I found it in a GATA release yesterday.

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Greek stock recovery fading away as ASE falls 21 pct on valuations

The curtain is coming down on Greece’s star turn with international equity investors.

Among the best-performing Europe gauges in 2013 after the government carried out the world’s biggest-ever debt restructuring, Greece’s ASE Index has become one of the worst, slumping 21 percent as lenders from Piraeus Bank SA to Eurobank Ergasias SA tumbled. Drops are trimming returns that approached 200 percent starting in June 2012 amid investments from hedge funds such as Paulson & Co. and Third Point LLC.

Equities with valuations triple the rest of Europe have come too far to be justified by an economy that is poised to emerge from a six-year recession, says Peter Garnry, head of equity strategy at Saxo Bank A/S. Investors are looking elsewhere in emerging markets for bargains as sanctions hitting Russia, Greece’s biggest trading partner, disrupt businesses.

“Greece was the trade last year, but I don’t think it’ll be the trade next year,” Garnry said in a phone interview from Hellerup, Denmark. “Investors looking for good returns should look elsewhere.”

This news story appeared on the Greek website ekathimerini.com at 10:55 a.m. local time on Tuesday morning---and it's courtesy of Harry Grant.

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E.U. compensates fruit and veg growers hit by Russian ban

The European Commission has announced emergency E.U. funding of €125m (£100m; $170m) for fruit and vegetable growers hit by Russia's ban on most imported Western food.

The funding is compensation for fresh produce which will not be sold. Instead it will be distributed free to schools, hospitals and other institutions.

Tomatoes, peppers, cucumbers, grapes and pears are included in the scheme.

Germany's Chancellor Angela Merkel insisted on Monday that the E.U. sanctions must stay in place "in order to show how serious we are" on the Ukraine crisis.

That much money is a drop in the bucket---literally.  I posted a story about this in my Tuesday column, but this BBC article is far more comprehensive---and I thank reader B.V. for his second contribution to today's column.

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Merkel sets limits to NATO solidarity with Baltic states

German chancellor Angela Merkel has said NATO will defend Baltic states if need be, but will not build permanent military bases in the region.

She spoke on Monday (18 August) on a visit to Riga in which she also laid a wreath at the Freedom Monument, a memorial to the Latvian War of Independence against Russia in 1918.

"I want to stress that ... Article V of the NATO contract - the duty to provide mutual support - is not something which just exists on paper, but is also something which must be filled with life”, she told press after meeting Latvian prime minister Laimdota Straujuma.

She noted that German jets will start NATO air policing operations in Latvia on 20 August and that NATO is to build up a rapid reaction force to be used if Russia tries to destabilise its Baltic neighbours on the Ukraine model.

This news item appeared on the euobserver.com Internet site at 9:21 a.m. Europe time on Tuesday morning---and it's the second offering of the day from Roy Stephens.

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Donetsk Republic Guarantees Safety of Humanitarian Convoy

The government of the self-proclaimed Donetsk People’s Republic (DPR) has guaranteed safe passage for Russia’s humanitarian convoy and the International Committee of the Red Cross (ICRC) employees accompanying it, the republic’s deputy prime minister said Tuesday.

“Our government thinks that the situation in DPR can be described as a humanitarian disaster. Naturally, we want the convoy to visit not only Luhansk, but Donetsk Region cities as well. To that end, we guarantee safety for the drivers of the convoy and ICRC employees,” DPR Deputy Prime Minister Andrei Purgin said.

The prime minister noted that the DPR had already ensured the security of the OSCE mission and international aviation experts on its territory when they arrived in Donetsk to work at the crash site of Malaysia Airlines flight MH17.

"Despite all Kiev’s provocations, despite the fact that Kiev started fighting in the area of the crash, we were able to ensure the security of the experts," Purgin said.

This article appeared on the RIA Novosti website at 1:51 p.m. Moscow time on their Tuesday afternoon---and I thank reader M.A. for sending it.

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Kiev must publish record of MH17 communications with traffic control – Russia

Kiev should make public the records of communications between the Ukrainian air traffic control and the Malaysian Airlines flight 17 in the hours before it was shot down over Ukraine’s turbulent east, Russia’s UN envoy said.

The issue was among several Russia raised at a U.N. Security Council meeting, which was called by Russia to discuss the progress of the investigation into the tragic incident, which killed 298 people in July, Vitaly Churkin said. Moscow sees the shortage of proper evidence known to the public so far as wrong.

“As far as we know, [UN’s civil aviation watchdog] ICAO is being kept on the sidelines of the investigation, which has been conducted for some time,” Churkin said.

This news item showed up on the Russia Today website at 11:50 a.m. Moscow time yesterday morning---and it's the second contribution in a row from reader M.A.

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Next Weeks ‘Decisive’ for Ukrainian Conflict – Kiev Official

The coming two weeks will be decisive for the peaceful settlement in Ukraine, the Kiev government wants to resolve the conflict through means of diplomacy, the deputy head of the Ukrainian president’s administration said Tuesday.

“I think that the coming two weeks will be decisive for transforming war into peace. The telephone diplomacy is giving way to direct contacts” Valeriy Chaliy told reporters, commenting on the forthcoming talks due in Minsk and Brussels on August 26 and August 30, respectively.

Earlier the same day, Ukrainian President Petro Poroshenko's press service said officials from Ukraine, the European Union and the so-called 'Eurasian Trio' (Russia, Belarus, Kazakhstan) will meet in Minsk on August 26 to discuss a number of urgent political and economic issues, including Ukraine's European integration, energy security and the stabilization of the situation in Donbas.

The press service also said Poroshenko had accepted the invitation of President of the European Council Herman Van Rompuy and European Commission President Jose Manuel Barroso to visit Brussels on August 30. In addition to the invitation to Brussels, Barroso and Poroshenko discussed by telephone the issues of granting Ukraine the third wave of EU macro-financial assistance.

This is another article from the RIA Novosti website---and this one appeared their at 8:20 p.m. Moscow time on their Tuesday evening, which was 12:20 p.m. in New York.  This article is courtesy of Roy Stephens.

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Battle for Ukraine: An Inside View of the Surreal Donetsk War Zone

It is a thin veneer that separates guests of the Donetsk Park Hotel from the surreal world outside. Inside, we watch BBC in English and ZDF broadcasting news in German. The hotel has electricity and Internet while air conditioning keeps out the summer heat.

OSCE observers sit at the bar drinking Lvivske, a dark Ukrainian beer, for €2.50 ($3.3) a pint, a price that is outrageous for Donetsk. Their shiny white Toyota SUVs are lined up outside, waiting to drive them through the war zone during those moments when it's not too dangerous.

This Thursday is not one of those moments. Shortly before 1 p.m., a salvo of grenades rains down. One's ear quickly gets used to the sounds of war, rapidly learning to halfway reliably tell them apart. This time, though, the detonations are unbelievably loud and very close. Only three minutes after leaving the hotel, I arrive in the midst of misery in this embattled city of Donetsk.

This very interesting boots-on-the-ground commentary was posted on the German website spiegel.de very early yesterday evening Europe time.  It's worth reading---and I thank Roy Stephens for finding it.

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No Weapons Seen Crossing Russian-Ukrainian Border - OSCE

The Organization for Security and Cooperation in Europe's Special Monitoring Mission working on the Russian-Ukrainian border has not seen any weapons crossing between the countries, an OSCE spokesman working on the Russian side of the border said Tuesday.

“We have not seen any weapons. There was a question of whether we saw military vehicles crossing the border. Yesterday at two [border crossing] points, we didn’t see any military vehicles crossing the border,” Paul Picard said at a briefing.

On August 15, Ukrainian President Petro Poroshenko claimed Ukrainian artillery destroyed Russian military hardware that had allegedly crossed into Ukraine at night.

The announcement came soon after a number of foreign news agencies reported that a convoy of military vehicles with Russian license plates had crossed into Ukraine via the Izvarino border checkpoint.

I said this story was bulls hit when I posted it last week---and now the OSCE spokesman confirms it.  The lies in the Western press are beyond outrageous.  This RIA Novosti article appeared on their Internet site at 1:38 p.m. Moscow time yesterday afternoon---and it's another Roy Stephens offering.

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Ukrainian Refugees Camp in Russia's Rostov Region - 8 Photos

Over 53 thousand Ukrainians fleeing the war zone in southeastern Ukraine, 16,000 of them children, found refuge in Russia's Rostov region by August 14.

According to Russian authorities, over 730,000 Ukrainians were forced to flee their homeland because of war and sought shelter in Russia.

About 58 thousand of them currently reside in temporary accommodation centers.

This brief 8-photo presentation was posted on the RIA Novosti website on Monday---and the photos are worth the trip.  It's another story that Roy dug up for us.

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Getting The Ukraine Narrative Straight: Washington Started This Fight, Not Putin

When even smart people like economist Paul Krugman buy into the false narrative about the Ukraine crisis, it’s hard to decide whether to despair over the impossibility of America ever understanding the world’s problems or to marvel at the power of the U.S. political/media propaganda machine to manufacture its own reality.

On Monday, Krugman’s New York Times column accepts the storyline that Russia’s President Vladimir Putin instigated the Ukraine crisis and extrapolates from that “fact” the conclusion that perhaps the nefarious Putin did so to engineer a cheap land grab or to distract Russians from their economic problems.

Or you could look at the actual facts of how the Ukraine crisis began and realize that it was the West, not Russia, that instigated this crisis. Putin’s response has been reactive to what he perceives as threats posed by the violent overthrow of elected President Viktor Yanukovych and the imposition of a new Western-oriented regime hostile to Moscow and Ukraine’s ethnic Russians.

Robert Parry tells it like it is on this essay posted on the David Stockman website yesterday---and it's the second last offering of the day from Roy Stephens.

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'They want their war---and they want it now' - Adrian Salbuchi

If you are playing a game of chess, and the next moves you are considering all inexorably lead to your king falling into checkmate, then you have only two options: you either topple your king and graciously accept defeat, or…

You can kick over the chessboard, refuse to accept defeat, and let all hell break loose...!

Is that what the “four horsemen of the Apocalypse,” namely the elites running the U.S., U.K., E.U. and Israel against their own peoples’ interests, are thinking of doing?

All parents know that if you allow a young brat to do as he pleases by giving in to his yelling and kicking and sobbing every time he does not get his way it will become increasingly hard to get the little monster to mature and behave in an adult and responsible manner.

This could very well be a metaphor for the way the Western powers have been behaving and acting in recent years, especially since 9/11, which for a while gave them a blank check to run amok throughout the Middle East and beyond.

Including the article posted above this one, if I had to pick one other must read article for you today---this would be it for sure.  This is truly what the Ukraine/Russia imbroglio is all about, with all the political niceties stripped away---one of the last puzzle pieces in the New Great Game---and we've just seen 'the flop' with Ukraine---and what the 'turn' and 'river' cards bring, is unknown as of yet.  It's the last contribution of the day from Roy Stephens---and it was posted on the Russia Today website at 1:12 p.m. Moscow time on their Tuesday afternoon.

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Three King World News Blogs

1. Dr. Stephen Leeb: "Russia Continues to Strengthen Ties With Germany and China"  2. Grant Williams: "Why Gold is Headed Into the Stratosphere"  3. Richard Russell: "New, Terrifying Confiscation to Worry About"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Jim Rickards: Warren Buffett and the Chinese Are Loading Up on Hard Assets

This 2:52 minute video clip with Jim was posted on the dailyreckoning.com Internet site last Friday---and it's worth your time, even though you've probably heard him say all this before.

I thank Harold Jacobsen for sending it our way.

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China allows 3 more banks, including Standard Chartered, to import gold

China has allowed three more banks, including a foreign lender, to import gold, sources with direct knowledge of the matter said, as the world's top gold buyer gears up for its strongest effort yet to gain pricing power of the metal.

The move, which brings the number of firms allowed to import gold into China to 15, comes ahead of the launch in September of a new international bullion exchange in Shanghai with which China hopes to become a price-discovery centre.

China and other Asian gold trading centres such as Singapore are calling for more localised pricing of the precious metal as they seek alternatives to the so-called London fix, the global benchmark for spot gold prices, which is being investigated by regulators on suspicion that it may have been manipulated.

This Reuters story, co-filed from Singapore and Shanghai, showed up on their website at 9:08 a.m. BST on Tuesday---and it's something I found on the Sharps Pixley website in the wee hours of yesterday morning.  However, because I was already loaded with stories for my Tuesday column, it had to wait until today.

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Koos Jansen: East Asia geared up for renminbi gold trading

Gold researcher and GATA consultant Koos Jansen reports that off-take from the Shanghai Gold Exchange has been flat for four weeks.

Meanwhile, Jansen writes, "China is developing its market infrastructure not only for physical gold trade but also to expand paper trading to steal pricing power from the dominant forces in the West and to promote the internationalization of the renminbi."

His commentary is headlined "East Asia Geared up for RMB Gold Trading" and it was posted at the bullionstar.com Internet site minutes before midnight local time on Monday.  I found this, along with the above paragraphs of introduction, on the gata.org Internet site yesterday.

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India gold smuggling explodes YoY

According to figures released by the government, between April and June it intercepted $44 million worth of smuggled gold at the country’s airports. That compares with $82 million in the year ended March 31.

Last year, between April and July, the Mumbai airport customs had seized 61.46 kilograms gold, while this year until July, it had seized 403.52 kilograms. The customs officials at the Chennai airport in the South, have also reported seizing much more gold than last year.

Plainly put, thanks to the high import duty imposed last year on the yellow metal by the Indian Government to bring down the nation’s fiscal deficit, gold smuggling is thriving across the country. Last year, the government had hiked the duty to 10 per cent.

Cases of gold smuggling at the two city airports in Mumbai alone have gone up over six times this year, with the customs department recording as many as 497 cases in four months from April, as compared to 79 cases in the corresponding period last year.

This gold-related news item appeared on the mineweb.com Internet site on Monday---and it's worth reading.

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Britain's fat cat pay gap hits new heights as average blue-chip chief executive earns 143 times more than his workers

The High Pay Centre’s research found the widest pay gap at miner Randgold Resources, where boss Mark Bristow earned almost 1,500 times his employees, many of whom are miners based at its sites in Africa.

Bristow received £4.4 million, while his average worker got just £2,968. Second on the list was Sir Martin Sorrell of media giant WPP, who took home a package worth £29.8million – almost 800 times more than his average worker’s salary of £38,265.

If you remember, yesterday's column was headlined "Randgold CEO Just Shrugs as Gold Mining Industry Produces More Metal at a Loss."  If you want to know one of the reasons that the executives of precious metal miners don't care about the price of the product they mine, or their shareholders---and why they won't pursue the price management scheme, you need to look no further than this.  I thank reader 'h c' for digging this story out of the Sunday edition of London's Daily Mail. The first part of the story is worth reading.

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Pierre Lassonde, Franco-Nevada: “Very Few People ‘Get’ This… But It’s Worth So Much Money”

This edition of Sprott's Thoughts is an interview of Pierre Lassonde by Henry Bonner over at sprottglobal.com on Tuesday.

Lassonde is another executive who is more than familiar with the precious metal price management scheme---and who is pretty much bought and paid for as well.

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Lawrence Williams: Is the LBMA Silver Price more transparent than the Fix? No!

So now we have had three days of the new LBMA Silver Price – the new name for the London Silver Fixing given that the term ‘Fix’ is somewhat discredited in modern-day parlance.  The banks involved in the old system, which had fallen to two, wanted to withdraw from it, in part because they felt the process, even if it was a totally honest system, which it probably was, could lay them open to having to defend expensive, and probably spurious, lawsuits and the London Bullion Market Association took upon itself to go out and set up some kind of new silver benchmarking process at very short notice. 

And is this new process any more transparent than the old one – one of the main charges laid against the old Silver fixing process.  The answer so far is probably not!  

Although one assumes it could become more open as the markets get to understand how it operates its new rather obscure process dealing in lakhs of silver rather than ounces, and in converting it back to a per ounce price.  (A lakh is a South Asian term for 100,000 units – in this case ounces.)  Why on earth such a measure was chosen defeats us – it just seems to be another way to obfuscate what should be a relatively straightforward process.

Amen to that---and everyone is in total agreement.  This commentary by Lawrie was posted on the mineweb.com Internet site yesterday---and it's worth the read.

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Aug 19, 2014

More Money Down Adds to U.S. First-Time Buyer Blues

The challenges facing prospective buyers of the least expensive homes in the U.S. are getting harder to overcome.

Already beset by stagnant wages, growing student debt and competition from investors who are snapping up listings, those looking to purchase moderately priced houses must also provide more cash up front. The median down payment for the cheapest 25 percent of properties sold in 2013 was $9,480 compared with $6,037 in 2007, the last year of the previous economic expansion, according to data from 25 of the largest metro areas compiled by brokerage firm Redfin Corp.

The higher bar is a symptom of still-tight credit that is crowding out first-time buyers even as interest rates remain near historical lows. Younger adults, who would normally be making initial forays into real estate, are among those most affected, weakening the foundations of the housing market and limiting its contribution to economic growth.

This Bloomberg news item from last Thursday was picked up by the finance.yahoo.com Internet site on Monday---and today's first news item is courtesy of Orlando, Florida reader Dennis Mong.

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PwC Fined $25 Million for Altering Bank Money-Laundering Report

PricewaterhouseCoopers LLP was fined $25 million after sanitizing a report to regulators on sanctions and money-laundering controls for Bank of Tokyo-Mitsubishi UFJ Ltd., New York’s top bank regulator said Monday.

The bank persuaded PwC Regulatory Advisory Services to change a compliance report related to financial transactions with sanctioned countries including Iran and Sudan between June 2006 and June 2008, according to a settlement with Benjamin Lawsky, superintendent of New York’s Department of Financial Services.

“When bank executives pressure a consultant to whitewash a supposedly ’objective’ report to regulators, and the consultant goes along with it, that can strike at the very heart of our system of prudential oversight,” Lawsky said in a statement announcing the settlement.

PwC was also banned for two years from consulting work with companies regulated by Lawsky and must implement changes to address conflicts of interest in consulting. It’s his second suspension of a financial-advisory firm. The Department of Financial Services hit Deloitte LLP’s Financial Advisory Services with a one-year ban in 2013 for work performed on behalf of Standard Chartered Bank Plc.

This article appeared on the moneynews.com Internet site at 11:51 a.m. EDT yesterday---and I thank West Virginia reader Elliot Simon for sending it.

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Unlike Russia, the U.S. Government Won't Take Your Pension Outright

Earlier this month, the Russian government seized its citizens’ pension contributions. Normally, 6 percent of Russians’ salaries is invested in financial markets, earmarked for their retirement. This year that $8 billion in contributions will finance Russian spending instead. Russia is not the first country to confiscate pension assets to pay its bills, and it probably won’t be the last. Argentina, Hungary, Poland, Portugal, and Bulgaria have all done the same in the last six years.

This is not only a setback for Russians’ retirement accounts; it also harms Russia’s financial markets, which count on a steady flow of pension assets each year. The move is expected to further weaken the already fragile Russian economy. Former Finance Minister Alexei Kudrin spoke out against the move, saying “today we are getting a government policy that lowers economic growth, plus a ‘shrinking’ of the economy’s possibilities and increasing uncertainty.”

In most countries, it’s extremely unlikely that the government will outright seize pensions. In America, it’s nearly impossible to change Social Security or Medicare benefits, and the idea of the U.S. government confiscating everyone’s 401(k) is unimaginable to all but the most ardent conspiracy theorists. However, it’s not unrealistic to think that the American government could take a bigger bite out of individuals’ 401(k) assets with higher tax rates: Income taxes are at historic lows, and if the American government needs to raise revenue in the future, taxes on 401(k) withdrawals may be higher (along with taxes on everything else). But at least the account’s assets will still belong to you.

This short article appeared on the businessweek.com Internet site on Monday sometime---and it's the second offering of the day from Dennis Mong.

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The Great Economic Shoe Waiting To Fall: Loss Of Faith In The Cult Of Central Banking

Much of the supposedly godlike power of central banks is participants’ faith in their powers to control not just finance but the real world that can be leveraged by finance.

The Grand Narrative of the global economy since the 2008 financial meltdown has been: whatever the problem, zero interest rates and more credit will fix it. Too much debt? Zero-interest rates and more credit will fix that. Government spending far exceeds tax revenues? Zero-interest rates and more credit will fix that. Economy sluggish? Zero-interest rates and more credit will fix that. Few jobs being created? Zero-interest rates and more credit will fix that.

Had a bad hair day? Zero-interest rates and more credit will fix it.

Implicit in this narrative is the notion that there are no hard limits on credit or central bank money creation. If creating $1 trillion in new credit-money and pushing it into the hands of financiers doesn’t do the trick, then push $2 trillion more.

This commentary by Charles Hugh Smith appeared on David Stockman's website on Monday---and is worth reading if you have the time.  It's the first of many contributions from Roy Stephens.

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Lawmakers Want to End Transfers of Military Equipment to Police

U.S. lawmakers alarmed by the aggressive police response to protests in Ferguson, Missouri, are pushing for Congress to limit the Pentagon's ability to provide civilian police departments with military equipment such as armored vehicles designed for the battlefield.

Georgia Democrat Hank Johnson wrote colleagues in the House of Representatives this week seeking support for legislation to curtail a program that passes surplus equipment from wars in Iraq and Afghanistan to municipal U.S. police forces, free of charge.

Because of the program "our local police are quickly beginning to resemble paramilitary forces," Johnson said.

Three other Democrats on the House Judiciary Committee wrote to Chairman Bob Goodlatte, a Republican, to ask for a committee hearing on "recent incidents of local law enforcement using excessive force." They pointed to events in Ferguson, where demonstrators have protested the shooting death of an unarmed black teenager by police, and elsewhere.

This article put in an appearance on the newsmax.com Internet site late Friday---and it's the second contribution of the day from reader Elliot Simon.

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WSJ/NBC Poll: The Death of American Optimism

Should we hold a funeral for American optimism?

In its most pessimistic reading ever, a new Wall Street Journal/NBC News poll indicates that most Americans, 76 percent to be exact, are not sure their children's generation will be better than their own. Less than a quarter (21 percent) believe their children's generation will lead better lives than their own.

What's more, 71 percent think the country is on the wrong track, 60 percent believe the United States is in a state of decline, and 54 percent say the widening income gap is undermining opportunity.

The pollsters say the survey reveals "a strong undercurrent of pessimism about the economy, the political system and the U.S. role in world affairs."

This should surprise no one, as G. Edward Griffin's "Creature From Jekyll Island" is now stalking the world.  This article showed up on the moneynews.com Internet site at 7:57 a.m. EDT yesterday morning---and it's another story courtesy of Elliot Simon.

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U.K. Property Prices Suffer 'Largest Decrease Ever' As London Real Estate Goes Into Full-Scale Collapse

More sellers than buyers, basically.

Property prices in the U.K. can't go on rising forever — and now they're not.

A survey of 90% of the market by Rightmove, a real estate price tracking company, shows that real estate prices fell 2.9% in August, the second consecutive down month this summer.

Prices fell nearly 6% in the overheated London market.

That news dovetails ominously with the rumors of "panic selling" in London as owners try to cash in on their overpriced houses at the very top of the market.

Having spent 27 years of my adult life selling residential real estate, I have first hand knowledge of what happens when a rabid bull bull market in real estate begins to head south.  The buyer vanishes---and the market implodes both in price and volume terms.  No doubt the drop is exacerbated by the disappearance of the Russian buyer in London---and it couldn't come at a worse time.  This Business Insider story appeared on their website around 4 a.m. EDT on Monday morning---and it was picked up by the finance.yahoo.com Internet site.  It's definitely worth reading---and it's the third contribution of the day from Dennis Mong.

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France scraps deficit target, as eurozone recovery halts

France has all but abandoned a target to shrink its deficit, as the eurozone endured a turbulent day that raised the prospect of a triple-dip recession.

Figures published by Eurostat on Thursday (14 August) indicated that the eurozone economy flatlined between April and June, while the EU-28 saw 0.2 percent growth.

Latvia was the currency bloc’s strongest performer with 1 percent growth, and there was positive data from former crisis countries Spain and Portugal, which both expanded by 0.6 percent.

This story appeared on the euobserver.com Internet site at 7:17 p.m. Europe time last Friday---and Roy Stephens sent it our way on Sunday.

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Draghi cash offer seen losing luster as euro area risks increase

Mario Draghi’s promise of cheap cash for banks betting on the euro-area revival is losing its allure.

Economists in the Bloomberg Monthly Survey cut their estimate of the take-up of funds under a program designed to boost bank lending. The reduction signals concern that the outlook for the currency bloc may be too weak to drive demand for loans, undermining a policy the European Central Bank president says is key to restoring the region’s health.

An escalating standoff with Russia threatens to worsen the prospects for the 18-nation euro area, where growth has already ground to a halt and inflation is running at the weakest pace in almost five years. That’s increasing pressure on the ECB to step up stimulus with radical tools such as quantitative easing to avert the risk of deflation and renewed recession.

“The next step is to see how big the demand is for liquidity,” said Peter Dixon, an analyst at Commerzbank AG in London. “If it falls well short of expectations then that’s the point at which the ECB may need to think again and start to bring the QE debate back to the table.”

This Bloomberg story was picked up by the Greek internet site ekathimerini.com---and it was posted there at 10:55 a.m. local time on their Monday morning.  I thank reader Harry Grant for sharing it with us.

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Germany tapped John Kerry’s phone, spied on Turkey for years - report

Germany’s foreign intelligence agency eavesdropped at least one telephone conversation of U.S. Secretary of State John Kerry and spied on NATO ally Turkey since 2009, Der Spiegel newspaper revealed on Saturday.

Germany’s Federal Intelligence Service (BND) picked up the phone call "by accident" in 2013, the weekly newspaper reported in a pre-publication citing unnamed sources. Kerry was discussing the Middle East tensions between Israelis, Palestinians and Arab states in a satellite link, according to Der Spiegel.

The new revelation comes after German media - Daily newspaper Sueddeutsche Zeitung (SZ) and regional public broadcasters NDR and WDR – reported on Friday that BND intercepted at least one phone call made by former Secretary of State Hillary Clinton. The date of the call was not given and the media said that it was also picked up “by accident”.

The German media retrieved the information of the hacking from documents that were passed to the CIA by one of its moles inside the BND.

This Russia Today article appeared on their Internet site at 10:25 p.m. Moscow time on their Saturday evening---and it's courtesy of Roy Stephens.

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Bulgaria halts South Stream gas pipeline project for second time

All operations on Russia’s Gazprom-led project South Stream have been suspended, as they do not meet the requirements of the European Commission, Bulgaria’s Ministry of Economy and Energy said on its website.

“Minister of Economy and Energy Vasil Shtonov has ordered Bulgaria’s Energy Holding to halt any actions in regards of the project,” the ministry said. This specifically means entering into new contracts.

There has been mounting pressure from the E.U. to put the project on hold, and now the European Commission will be consulted each step of the way to make sure it complies with E.U. law.

This very interesting story appeared on the Russia Today Internet site at 9:22 p.m. Moscow time on their Monday evening, which is 1:22 p.m. in New York.  Roy Stephens sent it our way---and it's definitely worth reading.

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Europe risks deeper economic crisis as Russia buckles and defaults mount in Ukraine

German bond yields plummeted to record lows and stock markets sold off across the world after Ukraine and Russia came to the brink of war, threatening to set off a financial shock and push Europe into deep recession.

Flight to safety sent yields on German 10-year Bunds tumbling to 0.97pc after Ukraine said its artillery had destroyed a “significant” part of a Russian armoured column that crossed the border into the Donbass. Yields on two-year notes turned sharply negative, implying that large investors are willing to pay the German state to look after their money.

NATO chief Anders Fogh Rasmussen said the crisis had reached danger point, but stopped short of calling it an invasion. “I can confirm that last night we saw a Russian incursion, crossing of the Ukrainian border,” he said.

European foreign ministers warned that they would tighten the sanctions noose yet further unless Russia draws back. “Any unilateral military actions on the part of the Russian Federation in Ukraine under any pretext, including humanitarian, will be considered by the European Union as a blatant violation of international law,” it said.

This Ambrose Evans-Pritchard offering appeared on the telegraph.co.uk Internet site at 8:23 p.m. BST on Friday evening---and before you take it as gospel, I urge you to read the Paul Craig Roberts piece---and RIA Novosti piece linked here---and posted further down in the Critical Reads section.  I thank Roy Stephens for sending it.

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MH17 Inquiry Results to Be Published Early September

The preliminary results of an inquiry into the crash of Malaysia Airlines Flight MH17 will be published during the first week of September, Agence France Presse reported Thursday.

The passenger jet is believed to have been shot down over war-torn eastern Ukraine on July 17, claiming the lives of all 298 passengers and crew members on board.

Ongoing fighting between pro-Russian rebels and Ukrainian government forces prevented investigators from reaching the crash site, but Dutch, Australian and Malaysian forensic experts managed to make it to the area to look for human remains and personal belongings.

The investigators have left Ukraine and will resume their probe in the Netherlands, Wim van der Weegen, spokesman for the Dutch Safety Board, or OVV, told AFP, noting: "We have sufficient information to compile a preliminary report."

I found this article posted on themoscowtimes.com Internet site on the weekend.  It showed up there at 4:06 p.m. Moscow time last Friday afternoon.  There was also a story posted on the RIA Novosti website on Monday about this as well.  It's headlined "Russia to Demand U.N. Report on Malaysian Boeing Crash Investigation"---and it's courtesy of Roy Stephens.

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Dozens killed in attack on convoy, Ukraine says; rebels deny firing rocket

Dozens of people, including women and children, were killed as they fled fighting in eastern Ukraine on Monday when their convoy of buses was hit by rocket fire, military spokesmen said.

Ukraine accused pro-Russian rebels of targeting the convoy, which it said was bearing white flags when it was hit near the eastern city of Luhansk. The separatists denied responsibility for the attack and one rebel leader suggested the incident might never have taken place.

"The rebels were expecting the convoy and destroyed it entirely," military spokesman Andriy Lysenko told journalists. "We haven't been able to count the number of victims ... dozens (were killed)."

The convoy had been in an area of fierce fighting between government forces and the separatists when it came under fire from rebel Grad and mortar launchers, the spokesmen said.

This Reuters article, filed from Kiev, is datelined at 7:03 p.m. EDT on Monday evening---which is a little hard to believe, since I received it from reader Dennis Mong a 1:08 p.m. EDT yesterday afternoon---so it's obviously been edited in the interim.

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State Department condemns Ukraine convoy shelling

The U.S. State Department condemned the deadly shelling of a convoy in eastern Ukraine on Monday that killed dozens of people, but said it could not confirm who was responsible for the attack.

"We strongly condemn the shelling and rocketing of a convoy that was bearing internally displaced persons in Luhansk and express our condolences to the families of the victims," State Department spokeswoman Marie Harf told a news briefing. "Sadly, they were trying to get away from the fighting and instead became victims of it."

The Ukrainian government accused pro-Russian rebels of targeting the convoy, which it said was bearing white flags. The separatists denied responsibility.

That's all there is to this brief Reuters new item, filed from Washington, that appeared on their Internet site at 2:43 p.m. EDT on Monday afternoon---and it's the second offering in a row from Dennis Mong.

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Ceasefire Must be Unconditional – Lavrov on Situation in Ukraine

This 1:28 minute video clip showed up on the RIA Novosti website---probably yesterday.  In it, Russian Foreign Minister Sergei Lavrov commented on the four-party meeting with his counterparts from Germany, France and Ukraine in Berlin.  I thank reader M.A. for sending it our way.

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Putin, Merkel Discuss Ways to De-escalate Situation in Ukraine - Kremlin

Russian President Vladimir Putin expressed his concern about the humanitarian situation in Ukraine during a telephone conversation with German Chancellor Angela Merkel, as the two leaders sought ways to de-escalate tensions, the Kremlin’s press service said Saturday.

“Ways for international community to help de-escalate the situation in Ukraine are under discussion,” the press service’s statement said.

Putin also informed Merkel of the ongoing cooperation between Russia and the International Committee of the Red Cross (ICRC) on their efforts to provide humanitarian aid to the civilian population of eastern Ukraine.

This RIA Novosti website appeared on their Internet site at 3:16 a.m. Moscow time on their Saturday morning---and it's courtesy of Roy Stephens once again.

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Russia's humanitarian aid to cross into Ukraine in batches

Russian humanitarian aid trucks will cross the Ukrainian border in small batches of several dozen vehicles and only after a thorough examination by border guards, Kiev says, following an official acknowledgment of 280 trucks carrying crisis-relief cargo.

“The cargo, in agreement with the mission of the Red Cross, will be delivered to the international crossing point of Izvarino-Donetsk in batches of up to 30 vehicles,” the head of the Ukrainian State Fiscal Service Anatoliy Makarenko was quoted as saying by LB.ua.

After clearing customs, the aid trucks will be transferred “only to official representatives of the Red Cross,” Makarenko added.

The Red Cross is expected to arrive at the border crossing on Monday to perform the necessary procedures.

This article was posted on the Russia Today website at 11:42 p.m. Moscow time Moscow time on Sunday evening---and it's courtesy of Roy Stephens once again.

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Russia Has Right to Security Measures as War Rages Near Its Borders - Lavrov

Moscow has the right to make decisions on security measures on its territory because hostilities continue a few kilometers away from its border with Ukraine, Russian Foreign Minister Sergei Lavrov said Monday.

"There is war on the other side of the border, with artillery, aviation, multiple-launch rocket systems and, according to some reports, missiles being used to attack Luhansk. It all takes place literally a few kilometers away from our border," he said.

The foreign minister added that many cases of cross-border fire were registered.

"We do not think that this was a deliberate act. Most likely, [the shelling] was a result of either accident or poor training. But this happens. There have been casualties and damage was done to civilian objects on the Russian side [of the border]," he said.

This RIA Novosti news item was posted on their website at 1:18 p.m. Moscow time on their Monday afternoon---and it's another contribution from reader M.A.

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NATO Seeking Long-Term Military Presence in Eastern Europe

NATO's leadership implore the leaders of its member-states to approve the long-term deployment of troops to Eastern Europe during its September summit in Wales, NATO's leaders wrote in an article published by The Wall Street Journal.

"We need the presence of NATO forces in Eastern Europe for as long as necessary; upgraded intelligence gathering and sharing; updated defense plans; and an expanded training schedule with more exercises, of more types, in more places, more often," NATO Secretary General Anders Fogh Rasmussen and Supreme Allied Commander Europe Philip Breedlove said in the article.

NATO members are scheduled to meet in Wales to discuss the alliance's response to Russia, which it accuses of interfering in Ukrainian affairs.

NATO has strengthened its air-policing missions, deployed more ships to the Black Sea and Baltic Sea, and conducted more exercises in Eastern Europe, citing the need to protect nearby countries from Russia after Crimea rejoined the country following a referendum in March.

This article appeared on the RIA Novosti website at 5:49 p.m. Moscow time on their Monday afternoon---and I thank Roy Stephens for bringing it to our attention.

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Putin's Ukraine gamble hastens exodus of Russian money and talent

The Kremlin's worst clash with the West since the 1991 collapse of the Soviet Union has accelerated the outflow of two of Russia's most prized assets: money and brains.

Vladimir Putin's annexation of Crimea and support for rebels accused of shooting down a passenger plane over Ukraine then hindering the recovery of the 298 bodies have shredded Western hopes of a lasting alliance with Moscow.

Sanctioned by the United States and European Union, Putin's courtiers are under fire, Russia's $2 trillion economy is threatened with isolation and millions of Russians across the world are wondering what next.

Russia is still earning much-needed revenues from pipelines carrying oil and gas to the West, but, less happily for the Kremlin, capital and talent are flowing in the same direction.

This Reuters story, filed from London, appeared on their Internet site at 1:51 a.m. EDT last Thursday morning---and it's the final offering of the day from Dennis Mong, for which I thank him.

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Russia launches China UnionPay credit card

Forget Visa and MasterCard. After the two American credit system payment companies froze accounts without notice in March, Russia has been looking for an alternative in China UnionPay.

China UnionPay plans to have 2 million cards in Russia in the next three years.

Instead of seeing the small Visa and MasterCard logo on credits cards, ATMs, and retail outlets, Russians will start to see the three words “China. Union. Pay.”

China UnionPay first emerged in 2002 on the domestic Chinese market as an alternative to Visa and MasterCard, but quickly expanded internationally, and now is already number one in terms of quantity of cards in the world.

This really interesting news item showed up on the Russia Today Internet site at 9:29 p.m. on Friday evening Moscow time---and I thank reader 'David in California' for passing it around on Saturday.

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Western Media Reports Shockingly Dishonest on Russia’s Part in Ukraine Events – Journalist

As everyone’s attention is drawn to the fate of the Russian humanitarian aid convoy at the Ukrainian border, some analysts are noting a shift in the tone of Western coverage of the conflict in the region, namely sociologist Mahdi Darius Nazemroaya, who shared his opinion speaking to Radio VR. Others, including Dennis Small, member of the editorial board of Executive Intelligence Review magazine, say the shift is miniscule, stating what the Western media reports are still a bunch of lies.

The role of media on both sides of the Atlantic has universally been a part of war propaganda, Mr. Small points out, adding it is all about “justifying what is in actual fact an intended war that both the British and U.S. under Obama want to trigger in the region with the purpose of seeking a conflict with Russia.”

Mr. Nazemroaya notes the media campaign against Russia and its leadership still exists, but the language and tone are now softer. “The emphasis has also changed, as EuroMaidan is more like a liability, it is forgotten.” By changing the narrative, Western media is obfuscating the actual political scene in Ukraine. They are shifting the focus from Ukrainian internal politics to broader geopolitics, to the Middle East and the resumed Iraqi conflict in particular.

This very interesting commentary showed up on the RIA Novosti website at 11:27 a.m. Moscow time on their Sunday morning---and it's the final offering of the day from Roy Stephen, for which I thank him on your behalf.  It's worth reading if you have the time.

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In The West, Respect for Truth No Longer Exists: Paul Craig Roberts

The Western media have proved for all to see that the Western media comprises either a collection of ignorant and incompetent fools or a whorehouse that sells war for money.

The Western media fell in step with Washington and blamed the downed Malaysian airliner on Russia. No evidence was provided. In its place the media used constant repetition. Washington withheld the evidence that proved that Kiev was responsible. The media’s purpose was not to tell the truth, but to demonize Russia.

Now we have the media story of the armored Russian column that allegedly crossed into Ukraine and was destroyed by Ukraine’s rag-tag forces that ISIS would eliminate in a few minutes. British reporters fabricated this story or were handed it by a CIA operative working to build a war narrative. The disreputable BBC hyped the story without investigating. The German media, including Die Welt, blared the story throughout Germany without concern at the absence of any evidence. Reuters news agency, also with no investigation, spread the story. Readers tell me that CNN has been broadcasting the fake story 24/7. Although I cannot stand to watch it, I suspect Fox “news” has also been riding this lame horse hard. Readers tell me that my former newspaper, The Wall Street Journal, which has fallen so low as to be unreadable, also spread the false story. I hope they are wrong. One hates to see the complete despoliation of one’s former habitat.

The media story is preposterous for a number of reasons that should be obvious to a normal person.

Here's another absolute must read on the same subject, but this one's courtesy of Dr. Paul Craig Roberts, as he tells it like it really is---and I thank reader M.A for sending it along.

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NATO Member Turkey Threatens Western-Owned Banks, Shifts East, Cozies up to Russia

Since the U.S. and E.U. began imposing and then widening and tightening sanctions against Russia, some U.S. allies have been getting second thoughts. The latest nation to begin severing ties with the U.S.-dominated Western alliance is arguably the most important yet.

That nation is Turkey, the largest and one of the fastest-growing economies in the Middle East – and most importantly, a long-standing NATO ally. For years Turkey has been slowly drifting away from the West, as its economy and geopolitical influence have grown. It hasn’t helped that its accession to the European Union has been repeatedly blocked by countries such as France and Austria, and is now directly opposed by Angela Merkel.

With recent events in Ukraine and the Middle East sending geopolitical shock waves around the world, Turkey’s Eastward shift appears to be accelerating. In a harbinger of things to come, Prime Minister Recep Tayyip Erdogan’s chief economic adviser, Yigit Bulut, announced that Turkey needs to “strengthen control of its banks and limit foreign ownership.

This article, posted on the wolfstreet.com Internet site on Friday, is courtesy of South African reader B.V.---and it's certainly worth reading if you have any time left.

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Kurds battle to retake Iraq's largest dam: general

Kurdish troops backed by US warplanes launched a bid Saturday to recapture Mosul dam, Iraq's largest, from jihadists, a senior Kurdish military official said.

"Kurdish peshmerga, with US air support, have seized control of the eastern side of the dam" complex, Major General Abdelrahman Korini told AFP.

"We killed several members of Daash. We are still advancing and in the coming hours should announce welcome news," he said, using the old Arabic acronym for the Islamic State jihadist group.

Witnesses said the air strikes started early in the morning and reported that fighting was ongoing in the afternoon.

There are reports that the dam is back in Kurdish hands, but ISIS is denying it.  As Churchill said, the first casualty of war is the truth.   This AFP article was posted on the france24.com Internet site at 6:05 p.m. Europe time on Saturday---and is the second offering in a row from reader B.V.

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Eight King World News Blogs/Audio Interviews

1. Ronald-Peter Stoferle: "This Will Trigger Major Dislocations in World Financial Markets"  2. William Kaye: "Trip Down the Rabbit Hole of U.S. Lies and Disinformation Agents"  3. James Turk: "The Greatest Fear For Central Planners in Gold and Silver"  4. Grant Williams: "Shocking Truth About the Missing U.S. and German Gold Hoards"  5. Michael Pento: "This is the Worst Nightmare For the United States and the West"  6. Robert Fitzwilson: "Panic Out of Fiat Currencies Accelerating Around the World"  7. The first audio interview is with Bill Fleckenstein---and the second audio interview is with Gerald Celente

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Workers rappel from Colorado State Legislature Capitol Dome to complete gold restoration

The Colorado State Capitol dome restoration is nearly complete and the final touches to the gold are being applied this week by workers who rappel from the lantern section high atop the building as they wrap up a $17 million project. The observation area, which has been closed for nearly eight years, will reopen to the public on October 2 with a grand celebration.

This very interesting 1:53 minute video clip showed up on The Denver Post website last Wednesday---and I thank "Robert in Denver" for sharing it with us.

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Koos Jansen: Global gold trade declines in the first half of 2014

Western gold exports to China were down in the first half of this year but the long-term upward trend continues, gold researcher and GATA consultant Koos Jansen reported yesterday.

His commentary is headlined "Global Gold Trade Declines in H1 2014" and it's posted at the bullionstar.com Internet site.  I found this embedded in a GATA release yesterday.

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In Vietnam, gold sales are down but premiums are up

Gold purchases by retail customers in Vietnam, the world's seventh-largest gold consumer, fell 42 percent year-on-year to 19.3 tons in the April-June quarter, according to the latest World Gold Council report.

Gold bar sales dropped to 16.5 tons, down 45 percent from the second quarter of 2013 while jewelry purchases hit 2.8 tons, down 17 percent.

Vietnamese investors have tended to store gold as a hedge against inflation. However, with an improving economy and slowing inflation, many are seeking to invest in stocks and property or simply to collect deposit interest, Vietnam News Agency quoted Nguyen Thanh Long, Chairman of the Vietnam Gold Traders Association, as saying.

This gold-related article, filed from Ho Chi Minh City, appeared on the Thanh Nien News website at 2:37 p.m. local time on their Monday afternoon---and I found this story in a GATA release.

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AngloGold to discontinue London listing to cut costs

AngloGold Ashanti, Africa's gold miner, said it intends to cancel the listing of its shares on the London Stock Exchange to cut costs.

Gold miners have been squeezing costs to cope with a decline in the price of the yellow metal, which has dropped 32 percent since touching $1,900 in September 2011.

AngloGold says the bulk of the trading of its shares is on the Johannesburg Stock Exchange and the New York Stock Exchange. The company added that it "wishes to streamline its administrative procedures and reduce costs arising from listings on multiple stock exchanges."

The miner's shares will stop trading in London on September 22.

The above four paragraphs are all there is to this brief article that appeared in the Financial Times yesterday.  It's posted in the clear in this GATA release.

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Randgold CEO just shrugs as gold mining industry produces more metal at a loss

In the report appended here Randgold Resources CEO Mark Bristow complains to Bloomberg News yesterday that the gold-mining industry is boosting supply to the market even while mining the metal at an increasing loss. Overlooking the gold mining industry's silence and the silence of its supposed trade association, the World Gold Council, in the face of the longstanding Western central bank policy of gold price suppression, Bristow seems not to understand even half the problem.

Randgold shareholders might ask Bristow if he's aware of any of the documentation archived by GATA---and if he plans to do anything about it. If he's not and he doesn't, he'll have one more reason to be shaking his head at his brain-dead industry.

As John Embry said more than a decade ago---"The miners are either, ignorant naïve, or complicit."  Bristow would definitely fall into the 'complicit' category.  This Bloomberg article, along with the above introductory paragraphs, was something I found over at the gata.org Internet site yesterday evening.

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This is what gold price suppression does to the environment in Peru and elsewhere

Even at the lunch café where we stopped after arriving in Peru's southeastern Amazon region, the family at the next table over looked deeply worried when we asked for directions. "Very dangerous," they said. "A lot of bad people there."

Madre de Dios is the center of illegal gold mining in the western Amazon. The miners' dredging equipment and the mercury they use to tease gold out of alluvial sediments has led to some of the most appalling environmental destruction anywhere in South America, turning lush forests into lunar wastelands.

Photographer Dominic Bracco and I wanted to see it up close. But the jungle camps where the miners work are notoriously lawless and miles from any help. Foreigners -- especially foreigners with cameras -- are not welcome.

This very interesting essay appeared on The Washington Post website at 8:30 p.m. EDT on Monday evening---and it's something else that came our way via a GATA release.

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Grant Williams: Thinker, trader, holder. Why?

In the new edition of his "Things That Make You Go Hmmm..." letter, Singapore fund manager Grant Williams suggests that Asian central bank demand will be decisive for the gold price eventually, and he extensively praises gold researcher and GATA consultant Koos Jansen for calculating Chinese gold demand better than anyone else.

Williams writes: "If you really want to understand what the reality might very well be, then from time to time you need to take a little leap of imagination when considering the activities of the Chinese central bank and open your mind to possibilities that the mainstream just refuses to entertain.

"Nobody -- and I mean nobody -- does that better than my friend Koos Jansen.

This longish commentary by Grant Williams was posted on the mauldineconomics.com Internet site yesterday---and it's another item I found courtesy of the gata.org Internet site.

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Aug 16, 2014

U.S. Investment Outflow Hits Record as China Cuts Holdings

The U.S. posted a record cross-border investment outflow in June as China and Japan reduced their holdings of Treasuries and private investors abroad sold bonds and notes.

The total net outflow of long-term U.S. securities and short-term funds such as bank transfers was $153.5 billion, after an inflow of $33.1 billion the previous month, the Treasury Department said in a report today. The June figure, and $40.8 billion in net selling of Treasury bonds and notes by private investors in June, were the largest on record, the Treasury said.

“Right at the beginning of June, you had a very strong sell-off of Treasuries and that’s what frightened a lot of private investors,” Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York, said by phone. “As yields stayed lower in subsequent months, some of the investors probably resumed their buying.”

China’s holdings of U.S. Treasuries declined by $2.5 billion to $1.27 trillion, while Japanese holdings dropped $600 million to $1.22 trillion, according to a Treasury report today.

This Bloomberg article, filed from Washington, was posted on their website at 9:04 a.m. Denver time on Friday morning---and I thank Ken Hurt for today's first story.

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Does George Soros know something we don’t about the S&P 500?

Among the highlights, Soros Fund Management increased a bear-call bet on the S&P 500 in a huge way. The fund lifted a put position — a bet the market will go lower — on the S&P 500 ETF to its biggest size yet, in terms of value and portfolio percentage, making a 605% leap over the previous quarter.

Bullion Baron, who has long kept a beady eye on Soros’s SPY moves, has summed up the latest dealings. He speculated that this could be  a hedge — or Soros is really worried about something. One possible something is China, which the hedge-fund titan referred to as a global uncertainty earlier in the year, notes the Baron.

Soros also lifted positions in Apple and Facebook and a portfolio loaded up with stocks, so he can’t possibly be all that gloomy. As for that China unease, WSJ’s MoneyBeat reports that China bears are entrenched and see stocks headed for a big fall. One strategist says it’s not good to see that stocks there have been rallying on both good and bad economic news.

This article showed up on the blogs.marketwatch.com Internet site at 6:35 a.m. EDT on Friday morning---and it's courtesy of reader M.A.

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Wal-Mart Cuts Profit Forecast Amid Slow Sales, Health Costs

Wal-Mart Stores Inc., the world’s largest retailer, reported stagnant same-store sales and cut its earnings forecast for the year, hurt by higher health-care costs and slow traffic at its supercenters.

Earnings for the year will now be $4.90 to $5.15 a share, down from a previous range of as much as $5.45, the Bentonville, Arkansas-based company said today in a statement. Sales at U.S. Wal-Mart and Sam’s Club stores open at least 12 months were little changed last quarter, which ended Aug. 1.

Chief Executive Officer Doug McMillon, who took the post in February, is trying to revive U.S. growth in the face of a slow economic recovery. The retailer hasn’t posted a same-store sales gain for six quarters, and customers are making fewer trips to big-box retailers. Cuts in government assistance also are leaving low-income shoppers with less money to spend.

This article appeared on the businessweek.com Internet site on Thursday sometime---and I found it in yesterday's edition of the King Report.

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Inflation bites into food retailers' results

Food retailers like Red Robin Gourmet Burgers and Noodles & Company are sounding the alarm on inflationary pressures, raising the question: Is this the start to higher food prices for consumers?

Official data show inflation only gradually rising for the economy as a whole with the personal consumption index gaining 1.6 percent in June; however, a dozen food companies in the past few weeks have warned steeper price hikes hurt results last quarter.

Prices are rising for several restaurant staples like beef, seafood and cheese. But costs aren't up everywhere: Grain and vegetable prices, for example, have been declining.

This morning Red Robin said lower margins, which fell 1.3 percent from the same period a year ago, were mainly due to higher food and beverage costs.

This news item appeared on the cnbc.com Internet site at 3:35 p.m. EDT on Thursday---and it's courtesy of West Virginia reader Elliot Simon.

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Marc Faber/Mike Crofton: How geopolitical issues could derail the markets

Philadelphia Trust Company CEO Mike Crofton and The Gloom, Boom & Doom Report editor Marc Faber give insight into geopolitical events and the markets.

This 5:56 minute video clip showed up on the cnbc.com Internet site on Wednesday sometime---and it's the second offering of the day from reader Ken Hurt.

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Proof of a Structural Change in the U.S. Workforce

Yesterday Federal Reserve Vice Chairman Stanley Fischer gave a speech entitled The Great Recession: Moving Ahead. A key topic is the question of long-term structural changes to the economy -- whether we're experiencing economic weakness with deeper roots than the cyclical effect of the last recession.

Despite Mr. Fischer's ambivalence toward, as he put it, "the relative importance of cyclical (short-term) versus structural (long-term) factors", I believe there is profound evidence that the U.S. workforce has undergone structural changes more fundamental than the cyclical impact of a recession -- even that of the Great Recession.

This very serious commentary, with some really sensational charts, showed up on the adviorperspectives.com Internet site on Tuesday---and I thank Victoria, B.C. reader 'John D' for sending it our way.

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White House loosens restrictions on lobbyists

President Barack Obama is loosening restrictions on lobbyists who want to serve on federal advisory boards, a White House official said on Tuesday, a setback to the president's efforts to tamp down special interest influence in Washington.

Obama came to office pledging to curtail the sway of lobbyists and banned lobbyists from serving on such panels, which guide government policy on a range of topics ranging from cancer to towing safety.

The president said he was doing so because the voices of paid representatives of interest groups were drowning out the views of ordinary citizens.

But many lobbyists felt they were being unfairly tarred by Obama's campaign to keep them out of public service. A lawsuit challenging the ban was initially dismissed, but a District of Columbia Circuit Court in January reinstated it.

This Reuters story, filed from Washington, showed up on their Internet site early Tuesday evening EDT---and I thank Phil Barlett for sharing it with us.

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THE ROOM: Special Edition---Our Highest-Rated Speech of All Time

Never in my life have I seen a round of applause like this one… and at an event normally composed of conservative, introspective investors to boot. But most surprising of all - and I must admit in my bias here  they were applauding a lawyer. A defense lawyer at that.

The usual fare at our conferences has much more to do with how to keep your money safe (and invest it to grow, of course). But we always prefer to mix in a few speakers to give us a real, on the ground reality check of what’s happening to our freedoms. Thus, when we invited constitutional law and criminal defense attorney Marc J. Victor to speak, we expected he'd share his insights into a slowly eroding respect for individual rights. He did not. Instead, he showed us just how bad things are getting and at a breakneck pace just beyond the public eye.

His talk was downright chilling. And now, for the first time, I'm excited to share his Casey Summit presentation in its entirety with all of you. He's the highest-reviewed outside speaker we've ever gotten feedback on. This is a must watch.

The 35:10 minute video presentation is headlined "Is America a Police State"---and as Casey Research CEO Olivier Garret says "This is a must watch"---and I concur.

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France rebels against austerity as Europe's recovery collapses

Michel Sapin, France’s finance minister, sent tremors through European capitals with a defiant warning that his country would no longer try to meet its deficit targets and would not inflict further damage on its economy by tightening into the downturn. “I refuse to raise taxes to close any budget gaps,” he said.

What is absolutely necessary is to adjust the pace of deficit reduction to the exceptional situation we are in today. Growth is too weak in Europe and inflation is too low. We must therefore stop reinforcing the causes of this depression,” he told RTL television.

“We must face the figures in front of us with realism. The truth is that, contrary to the forecasts of the International Monetary Fund and the [European] Commission, growth has broken down, both in France and in Europe.”

Eurozone strategy is in tatters after economic recovery ground to a halt across the region and France demanded a radical shift in policy, warning that austerity overkill is driving Europe into a depression.

This Ambrose Evans-Pritchard offering appeared on the telegraph.co.uk Internet site at 9:26 p.m. BST on Thursday evening---and it's another little something I found in yesterday's edition of the King Report.  It's worth your while.

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Germany is itself a victim of EMU’s austerity fanatics

So now we learn. Germany had a double-dip recession last year without telling us. This could soon turn into triple-dip after contraction of 0.2pc in the second quarter.

The bond markets are flashing deflation warnings, but they are also indicting the European authorities for gross incompetence. Professor Paul De Grauwe from the London School of Economics says policy elites have misdiagnosed the fundamental cause of Europe’s chronic slump and its failure to recover. They are treating a demand crisis as if it were a supply crisis, imposing “reforms” – an Orwellian touch – that can only exacerbate EMU-wide distress in the short-run.

“They are doing everything they can to stop recovery taking off, so they should not be surprised if there is in fact no take-off,” he said.

“It is balanced-budget fundamentalism, and it has become religious. We know from the 1930s that if everybody is trying to pay off debt and the government then deleverages at the same time, the result is a downward spiral,” he said.

This Ambrose Evans-Pritchard blog from The Telegraph on Thursday is something that Roy Stephens sent our way yesterday---and it's worth reading as well.

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E.U. Shot Itself in Foot With Russia Sanctions – Hungarian Prime Minister

The European Union shot itself in the foot by introducing economic sanctions against Russia, Reuters reported quoting Hungarian Prime Minister Viktor Orban’s Friday radio interview.

"The sanctions policy pursued by the West, that is, ourselves, a necessary consequence of which has been what the Russians are doing, causes more harm to us than to Russia. In politics, this is called shooting oneself in the foot," Orban said.

"The E.U. should not only compensate producers somehow, be they Polish, Slovak, Hungarian or Greek, who now have to suffer losses, but the entire sanctions policy should be reconsidered," Orban added. The prime minister also stressed his willingness to try to alter Brussels’ policy of imposing anti-Russian sanctions and urged other leaders to join him.

This story was posted on the RIA Novosti website at 1:50 p.m. Moscow time on their Friday afternoon---and I thank reader M.A. for sending it our way.

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Jim Rickards Interviewed on Russia Today's "BoomBust"

The first 12 minutes of this 27:32 minute video clip features Jim---and it's well worth watching.  Reader Harold Jacobsen slid this into my in-box at 6:10 a.m. EDT this morning---and I managed to stick it in today's column.

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EC, Russia, Ukraine Agree to Hold Talks on Association Pact, Gas Supplies

The presidents of the European Commission, Russia and Ukraine have agreed to hold talks on gas supplies, EU-Ukraine trade pact as well as on the current situation in Ukraine, the European Commission said on Thursday.

"President Barroso and President Putin spoke today on the phone. It was agreed to hold consultations between the Presidents of Russia, Ukraine and the European Commission on the issues related with the implementation of the Association Agreement as well as on the supply of gas, in parallel with the efforts to stabilise the political and security situation," the statement said.

"The concrete arrangements for these talks will be further discussed through the appropriate diplomatic channels," the document said.

This is another article from the RIA Novosti website.  This one showed up there at 1:04 p.m. Moscow time on their Friday afternoon, but the story is actually from Thursday.  It's the second contribution in a row from reader M.A.

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Russia raises hopes in Crimea

Like many taxi drivers, Anatoly likes to talk. He explains the situation as he guns his car round the twisting, pine-scented roads of Yalta. Like his rusting car, Crimea may have seen better days. 

'There are a million fewer tourists this year' he tells us, 'and food prices are soaring.' This will hit Yalta hard.

It is ultimately a tourist town. 

This year the Ukrainians aren't coming because they feel it's been stolen from them. And despite encouragement by the Russian government, there aren't yet enough rich Muscovites here to make up the numbers. 

Anatoly is trying to look on the bright side, though. He's a pensioner making some extra cash, and since Crimea returned to Mother Russia's bosom early this year, his pension has doubled.

This very interesting boots-on-the-ground article appeared on the aljazeera.com Internet site at 6:12 p.m. on Thursday, but doesn't say what time zone. It's another article from Roy Stephens---and it's worth skimming.

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Russian Defense Ministry denies reports military column crossed into Ukraine

Russia’s Defense Ministry has denied Kiev’s report that it “destroyed the Russian military column” which allegedly crossed into Ukraine, saying that no such column ever existed.

No Russian military column that allegedly crossed the Russian-Ukrainian border at night or during the day ever existed,” said Major General Igor Konashenkov, a spokesman for the Russian Defense Ministry.

The best scenario would be, the official said, if it was a “phantom” that the Ukrainian military destroyed “rather than refugees or their own servicemen.”

“Such statements – based on fantasies, or journalists’ assumptions, to be precise – should not be subject for a serious discussion by top officials of any country,” Konashenkov said.

This news item appeared on the Russia Today website at 1:56 p.m. Moscow time on their Friday afternoon---and it's the second offering of the day from Roy Stephens.

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Ukraine Tensions Flare as Poroshenko Touts Strike on APCs

Tensions flared in Ukraine yesterday as the government said its army destroyed part of a column of military vehicles that crossed the border from Russia, even as Vladimir Putin denies any military presence in the country.

President Petro Poroshenko said Ukrainian forces destroyed part of a column that had arrived from Russia. The Foreign Ministry in Moscow rejected the statement and warned about a potential attack on another convoy that carries aid. Ukraine’s top diplomat, Pavlo Klimkin, said he will meet with his Russian, German and French counterparts tomorrow in Berlin.

The incident adds to the tension building over Russia’s plan to send about 275 trucks with what it says is humanitarian aid to rebel-held areas in eastern Ukraine. Even with Ukraine saying it doesn’t see the armed vehicles as the sign of potential invasion, their arrival raised the stakes, said Volodymyr Fesenko, of the Penta research institute in Kiev.

This is such bulls hit.  Do you think for one minute, dear reader, that the Russians would be stupid enough to send in APCs along with their relief convoy when the entire world is watching what they're doing?  If you do, then you shouldn't be reading this column at all.  Try CNN instead.  This Bloomberg piece, co-filed from Kiev and Moscow, appeared on their website at 3:00 p.m. MDT yesterday, which was very early Saturday morning in Moscow.  The original headline read "Ukraine Says It Destroyed Part of Armed Convoy From Russia".  It's also courtesy of Roy Stephens.

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Pepe Escobar: Vanishing Point...

First, passenger airliner MH370 vanished from Planet Earth. Then MH370 vanished from the news cycle. First, MH17 was shot down by "Putin's missile" - as Planet Earth was told. Then MH17 vanished from the news cycle.

Where's Baudrillard when we need him? Had he been alive, the dervish of simulacra would have already deconstructed these two Malaysian planes as mirror images; from absolute vanishing to maximum exposure, then vanished again. They might as well have been abducted - and shot - by aliens. Now you seem them, now you don't.

Black boxes, data recorders - everything MH17 is now floating in a black void. The British are taking forever to analyze the data - and if they have already done so, they are not talking. It's as if they were singing, I see a black box / and I want it painted black … void.

The Pentagon, with 20-20 vision over Ukraine, knows what happened. Russian intelligence not only knows what happened but offered a tantalizing glimpse of it in an official presentation, dismissed by the "West". The best technical analyses point not to "Putin's missile" - a BUK - but to a combination of R-60 air-to-air missile and the auto-cannon of an Su-25.

This short commentary by Pepe is his opinion of the mysterious flight MH17---and the missing black boxes and air traffic control data.  It was posted on the Asia Times website yesterday.  It's the second-last contribution of the day from Roy Stephens---and it's definitely worth reading.

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Role reversal as African technology expands in Europe

Africans have long used technology developed abroad, but now a Kenyan cash transfer network which bypasses banks is being adopted in Europe.

The M-Pesa mobile money transfer system which allows clients to send cash with their telephones has transformed how business is done in east Africa, and is now spreading to Romania.

"From east Africa to eastern Europe, that's quite phenomenal when you think about it," Michael Joseph, who heads Vodafone's Mobile Money business, told AFP in the Kenyan capital Nairobi.

"I think that this is something the rest of the world can look at, to say that there are ideas that can emanate out of the developing world, and take it to the developed world."

This very interesting AFP article appeared on the france24.com Internet site on Wednesday and, surprisingly enough, it's worth skimming.  I thank South African reader B.V. for bringing it to my attention---and now to yours.

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Japan’s Keynesian Demise: A Cautionary Tale For Our Times

During early 1981 as the Reagan White House prepared its radical fiscal plan—-what Senate Majority Leader Howard Baker famously called a “riverboat gamble”—-we were visited by a high ranking delegation from the Japanese finance ministry (MOF). It is no overstatement to say that they were absolutely shocked by the administration’s plan to enact a sweeping 30% income tax cut and double the defense budget—while expecting that it would all balance out as a result of surging economic growth immediately and large domestic spending cuts down the road.

The MOF men feared the worst—politely noting the possibility that there would be insufficient economic growth and spending cuts to pay for the Administration’s monumental tax reductions and defense build-up. Then the U.S. would experience an outbreak of massive fiscal deficits—an unprecedented peacetime development that could roil the entire global financial system. In that apprehension the MOF men turned out to be dead right, and not because they were especially clairvoyant.

Back in those benighted times, fiscal rectitude was a widely shared commitment among government financial officials including Congressional Republicans and their conservative counterparts abroad and especially in Japan. Economic policy officials did not have to be hectored about deficits and the fact that there is no such thing as a fiscal free lunch. Indeed, notwithstanding a government led 30-year drive to rebuild their economy from the complete devastation of WWII, Japan’s public debt was only 50% of GDP as of 1980.

That was then. Today Japan’s public debt is 5X greater relative to the size of its economy and tips the scales at 250% of GDP. That is off-the-charts relative to all other large developed economies and has no parallel in previous history. In the interim, of course, Japan succumbed to the Keynesian stimulus disease, betting that after its thundering financial meltdown during the early 1990s it could borrow and print its way back to the prosperity it had known during the period of its post-war economic miracle.

This longish commentary by David Stockman showed up on his website on Friday---and it's the final offering of the day from Roy Stephens, for which I thank him.  If you have the time, it's worth the read.

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This Amazing Time-Lapse Video Shows Life Inside Pyongyang, North Korea

To much of the outside world, North Korea is a mystery. Little information about North Koreans’ daily lives makes it out of the country, partially because of its citizens disconnectedness and stringent restrictions on foreign visitors to the country. Westerners are accustomed to a gloomy narrative about the country, and famine, electricity shortages, North Korea’s draconian legal system and scarcity of modern luxuries loom large in outsiders’ imaginations.

But video producers JT Singh and Rob Whitworth show North Korea’s capital, Pyongyang in a cheerier light. In a state-sponsored visit, the pair created extensive footage of the city to create a time-lapse video of its people and sights. The two were escorted everywhere they went and were “not allowed to shoot any construction sites, undeveloped locations or military personnel.”

Their footage is detailed and intimate, but the obvious restrictions the pair had in creating the video make for a revealing and strange look at the enigmatic capital.

This 3:14 minute video clip showed up on the time.com Internet site last Sunday.  U.K. reader L.W. sent it our way on Wednesday---and for content reasons, it had to wait for today's column.  It definitely falls into the must watch category---and be prepared to be amazed, as I certainly was.

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Three King World Blogs

1. Art Cashin: "Short Squeeze of Epic Proportions to Shock Market Participants"  2. Bill Fleckenstein: "U.S. Stocks to Crash as no Liquidity Fuels Panic"  3. Gerald Celente: "This Global Collapse is Just Getting Started"

[Please direct any questions or comments about what is said in these interviews by either Eric King or his guests to them, and not to me. Thank you. - Ed]

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Billionaire Paulson Maintains Stake in Biggest Gold ETP

Billionaire hedge fund manager John Paulson stuck with his holding in the biggest exchange-traded product backed by gold as prices rose on demand for a haven.

Paulson & Co., the largest investor in the SPDR Gold Trust (GLD), kept its stake at 10.23 million shares in the three months ended June 30, a government filing showed yesterday. The holdings were unchanged for the fourth straight quarter.

Gold rallied 9.3 percent in 2014, defying bearish forecasts from Goldman Sachs Group Inc. and outperforming equities and bonds amid escalating conflicts in Eastern Europe and the Middle East. The haven appeal may be waning amid concern that the Federal Reserve will raise interest rates as the U.S. economy accelerates, according to Lance Roberts, the chief strategist for STA Wealth in Houston.

This article appeared on the Bloomberg website at 1:10 a.m. MDT on Friday morning---and I thank Ken Hurt for bringing it to our attention.

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McEwen Mining Chief: Gold Headed to $5,000 Within 4 Years

While gold has stagnated recently, fluctuating in a range of $1,250 to $1,350 an ounce since mid-March, Robert McEwen, chief owner of McEwen Mining, hasn't given up on the precious metal.

"I'm a long-term believer in gold, and I see it ultimately getting to $5,000," he tells CNBC. "Anything short of that, I wouldn't be hedging."

He thinks gold will reach that level within the next four years.

A bit over ten years ago I phoned Rob when he was the CEO of Goldcorp when it was only trading for two or three bucks a share before it became a major producer.  I was just on board with GATA at the time---and trying to raise a few bucks for the cause.  Rob heard me out, and then sent us a cheque/check for $1,000.  He knows what's going on, but like the rest of the mining CEOs, he won't say a word in public about it.  This article appeared on the moneynews.com Internet site at 7:32 a.m. EDT on Friday morning---and it thank Elliot Simon for digging it up on our behalf.

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Russia seeks safe haven in gold, away from dollar and euro

Russia is taking steps to ensure that it protects itself from any future dollar or euro sanctions. Moscow boasts the world’s 5th biggest foreign exchange reserves and the 6th largest gold reserves. In total, the assets amount to over $1.5 trillion.

While the West is continuing to try and punish Russia via economic sanctions, the response of the Russian Central Bank has been to diversify away from the euro and dollar – and to buy up more gold.

As the geopolitical situation in Ukraine deteriorates, Russia is moving to protect itself from currency risks associated with the euro and the greenback.

“Due to the worsening geopolitical situation, the Central Bank actively redistributed foreign exchange reserves, replacing US Treasury bonds with gold,” Alfa Bank’s chief economist, Natalya Orlova, told Kommersant.

There's nothing really new here, but it's nice to see these facts show up in the print media other than the stories that appear on the Internet---including mine.  But, having said all that, it's still worth the read.  This Russia Today news item was posted on their website at 5:15 p.m. Moscow time on their Friday afternoon---and it's the final offering of the day from Elliot Simon.

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GoldCore: New LBMA silver price still not transparent

GoldCore's daily commentary complains that the new silver pricing mechanism in London is not transparent and seems rushed and incomplete---and further comments that:

"The entire process has been a bit of a shambles. The Gold Anti Trust Action Committee (GATA) and those concerned about price manipulation will allege that the LBMA and the western bullion banks are engaged in a rebranding and repackaging exercise in order to maintain a cosy gold and silver cartel of bullion banks and ultimately control over precious metal prices."

"If the CME/Reuters aren’t willing to share with the public the presentation that they made at a closed door seminar, especially since they won the competition and are now running the process, what hope is there for transparency in this new process?"

Mark O'Byrne basically rips these guys a new one---and rightly so.  And as I've said before, it's not the silver fix that's important, it's the entire CME/Comex/CFTC-endorsed price management scheme that really matters.  The fixes, both gold and silver, although part of the problem, are not the real problem---and both Ted Butler and I wish that more people would acknowledge that.

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